Barack Obama made a pledge to get internet and broadband services to rural parts of the country. Billions were allocated and it has been a long yet failed pledge, resulting in more fleecing of our taxpayer dollars.
President Obama pitches $18 billion wireless broadband plan
Wired to fail
How a little known agency mishandled several billion dollars of stimulus money trying to expand broadband coverage to rural communities.
In September 2011, as the U.S. economy continued to sputter in the shadow of the Great Recession, Jonathan Adelstein offered a bold promise on behalf of a tiny federal agency that had long strived to improve the lives of rural Americans.
The administrator of the little-known Rural Utilities Service had just finished announcing $3.5 billion in aid to expand high-speed Internet access to the hardest-to-reach areas of the country. The awards, part of the federal stimulus passed by Congress two years earlier, had been crucial to President Barack Obama’s blueprint for a recovery that would ensure farmers and remote businesses could compete in an increasingly global economy.
“These investments in broadband will connect nearly 7 million rural Americans,” Adelstein pledged in a report to Congress, “along with more than 360,000 businesses and more than 30,000 critical community institutions like schools, health care facilities and public safety agencies, to new or improved service.”
Judged against the agency’s 80-year track record, those numbers didn’t seem unrealistically ambitious. During the Great Depression, after all, RUS had loaned out millions of dollars to string electric lines to distant farms and small towns in parts of the country that private companies refused to serve — a bold and calculated risk that had transformed America in a single generation.
But more recently, the performance of RUS has been much less than stellar. Even the agency’s staunchest defenders in Congress had learned firsthand: When it came to funding broadband projects, RUS never found its footing in the digital age.
Sometimes, RUS ignored its rural mission by funding high-speed Internet in well-wired population centers. Sometimes, it chose not to make any loans at all. Sometimes, RUS broadband projects stumbled, or failed for want of proper management; loans went delinquent and some borrowers defaulted. Yet despite years of costly missteps that left millions of Americans stranded on the wrong side of the digital divide, a stable of friendly lawmakers swallowed their doubts about RUS and made sure the politically protected agency wasn’t cut out of the historic stimulus effort.
It should come as little surprise, then, that four years and four directors later, RUS has failed to deliver on Adelstein’s promise.
A POLITICO investigation has found that roughly half of the nearly 300 projects that RUS approved as part of the 2009 Recovery Act have not yet drawn down the full amounts they were awarded. All RUS-funded infrastructure projects were supposed to have completed construction by the end of June, but the agency has declined to say whether these rural networks have been completed. More than 40 of the projects that RUS initially approved never got started at all, raising questions about how RUS screened its applicants and made its decisions in the first place.
But a bigger, more critical deadline looms for those broadband projects still underway: If these networks do not draw all their cash by the end of September, they will have to forfeit what remains. In other words, they altogether may squander as much as $277 million in still-untapped federal funds, which can’t be spent elsewhere in other neglected rural communities.
And either way, scores of rural residents who should have benefited from better Internet access — a utility that many consider as essential as electricity — might continue to lack access to the sort of reliable, high-speed service that is common in America’s cities. Even RUS admits it’s not going to provide better service to the 7 million residents it once touted; instead, the number in the hundreds of thousands.
The checkered performance of RUS offers an all-too-familiar story of an obscure federal agency that has grown despite documented failures, thanks in large part to its political patrons in Congress. The massive infusion of stimulus money, which required RUS to disperse record sums faster than it ever had, further exposed its weaknesses — troubles that, in many ways, remain unaddressed, despite repeated warnings — even as RUS continues lending.
“We are left with a program that spent $3 billion,” Mark Goldstein, an investigator at the Government Accountability Office, told POLITICO, “and we really don’t know what became of it.”
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It took a bigger economic crisis, more than eight decades earlier, to bring RUS into existence. The agency, known then as the Rural Electrification Administration, had been a centerpiece in President Franklin Delano Roosevelt’s historic New Deal. But the effort was controversial from the start. Private companies derided the government’s investments in rural energy as “Bolshevik” and “un-American,” but within several years, hundreds of public utilities were operating, and within 20 years, almost all U.S. farms had electricity. The model was so successful that REA shifted shortly after World War II to providing low-interest loans for rural telephone cooperatives.
Dwight Eisenhower entered the White House, vowing to abolish the REA, which he derided as “creeping socialism.” Within two years, however, even he was extolling the agency’s performance, praising its “great advances for rural America.” The program grew under Kennedy and Johnson, who in 1937, had led the formation of an electricity cooperative in the Texas Hill country. Richard Nixon again tried to kill it, arguing that the program had outgrown its usefulness and at that time only served “country clubs and dilettantes.” But an outraged farm bloc in Congress, led by senators such as George McGovern of South Dakota and Hubert Humphrey of Minnesota, forced Nixon to back down.
By the end of the 20th century, REA’s original electricity mission was more or less accomplished. And in 1994, REA and another agriculture program that had backed water and sewer projects were combined to form the Rural Utilities Service. Yet it was late in the Clinton administration that the agency’s portfolio expanded in a way that would be as dramatic — and ultimately, as controversial — as when it began.
Nations like Japan and South Korea had quickly achieved nearly universal and affordable broadband coverage, but the United States was lagging. “Internet access ought to be just as likely as telephone access,” President Bill Clinton said in April 2000. That year, Clinton’s budget included $102 million for a pilot broadband program to be administered by RUS, building on its previous telecom work.
Bolstered by a 2001 Brookings Institution study that estimated widespread adoption of basic broadband could add $500 billion to the U.S. economy, Congress approved permanent funding for the program. In the eyes of allies like Montana Sen. Conrad Burns, robust, widespread Internet access “would be as important to the national destiny as the railroads in the 19th century. … Universal broadband should be the national priority … (the) same way as putting a man on the moon was.” And low-interest federal loans, he believed, were the best way to do it. “The RUS telecom program has never issued a bad loan in over 50 years,” Burns said. “The government has actually made money off of those loans.”
In 2004, President George W. Bush proposed that broadband coverage should be universally available within three years. His support touched a nerve with Iowa’s Sen. Tom Harkin, a powerful Democrat who knew that one of the government’s primary mechanisms for meeting that goal was not up to the task. At a confirmation hearing for James Andrew, who eventually would take over RUS under Bush, Harkin recalled an encounter with the president in which he confided that universal broadband would never happen if RUS didn’t start spending money.
“We put in $2 billion (to the farm bill) to do that,” the senator grumbled to Bush, “but the Department of Agriculture has been dragging its feet.” By making onerous demands on its applicants and keeping them waiting months for approval, Harkin said RUS had managed to leave $1.6 billion on the table.
“I don’t want to sound too cynical,” Harkin told Andrew, “but it almost sounds like the cable companies and the big phone companies have gotten to somebody and said, ‘We don’t want this program to work.’”
Harkin then delivered to Andrew a brief sermon on the mission of RUS: “We were not risk averse when we put telephone lines out to farmsteads and our small towns in America. We knew there was risk in doing that, but we managed it. RUS manages risk. And that is what I am asking in broadband, manage risk. Don’t be so risk averse that you say, ‘We cannot give a loan out there because we want to make 100 percent certain that the company we give it to will not default and will not fail. Some of them will …” Read more here.
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